President Barack Obama's reelection might be the top news story, but Silicon Valley analysts say the bigger concern is the looming “fiscal cliff.”

The incumbent president will need to act quickly to help avert the fiscal cliff - a combination of expiring tax and spending cuts, plus new health care taxes – all set to take effect this January.

If Obama can’t hammer out a solution with Congress, experts say, the valley could see higher taxes, a drop in spending or even a recession. And that could weaken demand for the valley’s varied products or lead to layoffs.

“The valley produces a tremendous share of wealth and jobs in the country,” said Bay Area Council CEO Jim Wunderman. “If the demands for goods and services nationwide drops during a recession, it would be very bad.”

Wunderman says more important than Tuesday's election results is shifting national attention from day-to-day campaign updates to a pressing threat to the economy.

“The presidential race has overshadowed the issue of the fiscal cliff,” Wunderman said.

In addition to the looming possibility of a recession, analysts have forecasted “unprecedented” tax hikes if lawmakers don’t act.

Michael Hutchison, a professor of economics at the University of California, Santa Cruz, said that despite political posturing, both parties should be amenable to avoiding the fiscal cliff.

“Since the majority of Republicans want to lower taxes, and the majority of Democrats only want to raise taxes on high-income earners,” Hutchison said, “it should be possible to compromise on limiting automatic tax hikes to many groups of tax payers.”

Hutchison added that if the cliff is not avoided, economic fallout “would not be targeted at high tech, but general economic activity” nationwide. He said tax increases are generally bad for spending, adding to a potential economic slowdown.

On a state level, Wunderman said a ballot initiative, Gov. Jerry Brown’s Proposition 30 tax hike to fund education, would have a much more imminent impact than the presidential race.

“That’s a fiscal cliff in it’s own making,” Wunderman said. “If that doesn’t make it, the state’s going to have to make some decisions.”

If voters reject the tax hike on those making more than $250,000, Brown has said California will revert to the budget he approved early this year. That includes big cuts for education, to the tune of $3.1 billion for K-12 schools and community colleges, plus a combined $500 million cut for the University of California and California State University systems.